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The Probabilities Of A Fall In Gold Price


Gold prices are unlikely to fall sharply in the near future . The RBI working group,headed by KUB Rao, calculated the probability of a gold price decline in four baskets (6-months, 3-months, 2-months and on a 1 month basis). Its analysis of the past data shows that there is no probability of a drop in gold prices of more than 40% and even the possibility of 30% dip or more in prices is rare in all the four baskets.

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The Real Rate Of Interest On Deposits


Small wonder that gold prices shot up and gold  investment became popular between 2008-2011,huh?Ditto for real estate.

So Why Do We Indians Buy Gold?


Losing Money On Gold


The price of gold has tripled in the last six years, giving investors an annual compounded return of nearly 20%. Compared to bank deposit returns of 8% a year and a volatile equity market, it is hard to argue with proselytizers of gold. But gold hasn’t always appreciated year-on-year. In the four years between 1988 and 1992, the price of gold fell every year. Again, between 1994 and 2001, gold prices declined year-on-year. Indeed, in the quarter century between 1980 and 2005, investors in gold lost 11.74% of their capital. The present rise in gold prices, which took off after the Lehman Brothers’ collapse in 2008, may reverse. These are the facts to remember,as you try to decide whether to keep your gold or sell.

Nota Bene

wealthymatters.comCompared to other asset classes, gold has historically outperformed in a wide range of uncertain economic scenarios: deflation (falling prices accompanied by low or negative growth), stagflation (high inflation and low growth as seen in the US in the 70s) and in potential hyper-inflationary outcomes while it tends to lag when the global economy is booming.

Gold Smuggling


Here is a fact I came a cross about a week ago.If you are trying to decide which way the price of gold will move short term, remember this fact.India’s official gold purchases might be down but consumption has probably not reduced as much as many pundits are positing, despite the high prices in Rupee terms.Mumbai gold prices are about Rs 1,500 per 10 grams higher than international prices

A Gold trading Tip

wealthymatters.comHere is a bit of traditional wisdom:

Gold generally trades in the lower range around March and July. Generally, this is the best time to buy gold and marriage season is the best time to sell gold.

The Story Of The Most Expensive Coin In The World

wealthymatters.comIn 1933, the President of the United States of America, Franklin D. Roosevelt stopped the coinage of gold and made it illegal to own the metal (although coin collectors could retain their pieces). With one exception, no 1933 double eagles were ever legally released, although some were stolen from the government, and over the years several were recovered.

In the summer of 2002, a 1933 Double Eagle was auctioned off for $7,590,020 , which shattered the old record of $4,140,000 paid at a public auction for an 1804 silver dollar. This piece is unique as the only 1933 double eagle the U.S. government has deemed legal for its citizens to own (having been negotiated as such through terms of a U.S. treaty with a foreign government). Even illegal instances of the 1933 double eagle would be worth hundreds of thousands of dollars, but it would be illegal for a U.S. coin dealer to broker a deal with one of these coins. There is no other date of St. Gaudens double eagle that is worth a significant fraction of this extraordinary coin. In fact, a complete uncirculated set of all other St. Gaudens double eagles could be put together for just over three million dollars (less than half the price paid for the 1933), including the extremely rare, ultra-high relief, proof pattern. Without the rare pattern, the set would be less than $ 750,000. Read more of this post

Gold By Transmutation

Gold them becomes a fiat currency?

Canara Robeco’s Take On Gold

wealthymatters.comBelow is an article from today’s ET.The author has failed to convince me that buying and holding physical gold at current prices is likely to be a good idea in the long term.After all paper currency systems must collapse sometime and gold tends to be around forever.But buying paper gold,especially as part of a blended mutual fund such as a combo of equities,gold and debt might have something going for it.Read the article below and decide for yourself:-

Gold to scale new peaks in coming years: Ritesh Jain, Head of Investments Canara Robeco Asset Management.

It’s a lump of metal with no cash flows and earnings power. The buyer even foregoes gradual accumulation of intrinsic value as it is industrially useless. But just imagine the second-largest economy in the world frantically buying this metal. Read more of this post


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